BRP: Snow, sea, sand and (coming) street – November 13, 2006

VALCOURT, Quebec — Having dealt with challenging issues in its marine and off-road business in the past few years, Canadian-manufacturer BRP now will look to a new arena — the on-road segment.
Jose Boisjoli, BRP’s president and CEO, told Powersports Business the company hopes to introduce an on-road product in the next two years. Although Boisjoli would not comment on what that product would be, he did say the privately held company has been working on it for three years.
“We feel now we have a good idea (of what the product would be) and if everything were to go well, we would be on the road in the next two years,” he said.
In the far-ranging interview, Boisjoli also said BRP would not be adverse to looking at partnering with another OEM to provide an on-road product, will look at the growing UTV segment and hinted the company could have an answer to Kawasaki’s recently unveiled Ultra LX, the horsepower king of the PWC industry.
“Don’t count us out,” Boisjoli said when asked if BRP, the segment’s market share leader, would try to match or exceed Kawasaki’s 250-hp PWC in the coming year.
“Don’t count us out” could be the company’s motto over the past few years after it has overcome dramatic exchange rate losses, gained market share for its Evinrude marine engine lineup and overhauled its ATV image by changing its focus and brand name. BRP’s ATVs now are made and marketed solely for the sports side and brandish the Can-Am name, a gesture to its racing heritage.
The shift on the ATV product and the improved Evinrude sales have been vitally important for BRP to present a diversified product line to its European dealers, especially the western part of the continent where Ski-Doos are not widely sold.
Once those two huge tasks were under way, BRP moved to strengthen its European market. The company purchased its previous main European distributor, Jets Marivent, earlier this year.
“We felt that we could gain more by going direct” to dealers, Boisjoli said. “Obviously when you sell to the distributor, you give him a big chunk of money to handle the marketing, sales and services. By going direct, you have more expenses, but we feel we can do it more efficiently” because of the increased volume of dealers. The deal to purchase Jets Marivent means BRP will be selling directly to 550 more dealers, including those in Germany, Spain and the United Kingdom, bringing the number in Europe to more than 1,000.
Bringing an on-road product to market could only help BRP overseas as well as in North America. Two of the three product lines BRP is known for by U.S. powersports dealers, Can-Am and Ski-Doo, are in areas of the market that in terms of overall sales have decreased. Snowmobile unit sales fell 9 percent last year in the United States and ATV sales have decreased slightly much of the past two years.
“We have momentum with our new product lineup,” Boisjoli said of Can-Am, “but we know the market will continue to decline slowly. That’s our belief.”
Those familiar with BRP might guess the on-road segment the company is choosing to go into is motorcycles. The company already manufactures Rotax motorcycle engines for BMW and Aprilia.
While Boisjoli won’t say which on-road segment BRP will unveil, he did say the new product will be innovative. Boisjoli said the company has to push innovation because it can’t manufacture products at the same volume of the Japanese OEMs.
Boisjoli said he doesn’t expect the arrival of the on-road product to drastically increase the number of North American dealers. He does expect some increase, perhaps with large city dealers, citing nearby Montreal as an example, who previously had no reason to have the franchise.
Where will BRP manufacture the on-road product? Boisjoli said that hasn’t been decided. However, the Valcourt manufacturing facility could have some room available in the future as the company’s ATV manufacturing is being moved from Valcourt, a small Canadian town, to BRP’s Mexico plant. About 20 percent of the company’s ATVs will be made in Mexico next year, 60 percent in 2008 and all of it by 2009.
Could BRP team up with another OEM to produce an on-road product? Boisjoli said the company has not had the time in the past three years to investigate that because it was so intent on improving its ATV and Evinrude business and addressing its European opportunities.
“Going forward,” he said, “definitely we’ll look at opportunities.” It’s a practice that has become more popular by some of the industry’s mid-sized OEMs. Polaris-KTM and Piaggio-Arctic Cat relationships, announced in the past year, have resulted in shared dealer networks and new product.
On other topics, Boisjoli said:

BRP has seen enough interest in the UTV segment by the enthusiastic part of the ATV crowd to look at the possibility of making side-by-sides.

BRP has no commercial plans currently for its EXIT vehicle, a four-wheel vehicle the company describes as being positioned between a trial motorcycle and a BMX bicycle.

the company increased its marketing budget for the Can-Am line this year as a result of the new brand name and will again increase its marketing budget for 2007. PSB

Comments

Feel free to leave a comment... and oh, if you want a pic to show with your comment, go get a gravatar!